2013: the year when precious metals weren’t so precious…

In true reflective and retrospective mode as the end of the year is looming, and also taking cue from the recent publication of PWC’s Gold, Silver and Copper report 2014, let us take a closer look at metals, which are amongst the most popular commodities for binary options traders.

According to the above mentioned report, gold, silver and copper were the hardest hit metals during 2013, a year which was characterized by write downs, commodity price drops and lower revenues.

If we take into account how the price of gold plummeted recently, following the Fed’s tapering related announcements, leading many investors to believe that this decision will push the price of gold downwards as this takes away the safety net that was keeping gold prices up, is it perhaps surprising that the worst performing metal of the year was not gold, but silver, whose prices during 2013 plummeted by 40%.

Gold prices, on the other hand, which had surpassed $1,900 per ounce in 2011, fell to around $1,200 in the summer of 2013 and they are currently hovering around that level, or slightly lower. Meanwhile, copper prices also gave clear signs of an ailing industry, since they fell from $3.70 per pound at the start of the year to above $3 currently. According to PwC’s report, copper was the metal that “outperformed” this year.

What paints a grim picture and should be noted by those binary options traders that trade in commodities and particularly in metals, is the PwC’s prediction that the challenges affecting these metals are far from over. For example, the gold producers that were asked maintain that they are preparing for another challenging year and their low levels of confidence are reflected in the fact that only 47% of gold producers expect the price to increase in the next 12 months, compared to a massive 88% a year ago.

On the contrary, and despite being this year’s failure story, silver miners are surprisingly optimistic for 2014, with only 9% anticipating the price of silver to fall further next year. Perhaps this might reflect that the price fell low enough during 2013.

Lastly, 62% of copper miners indicated that they think that copper would be stable next year, with prices remaining pretty much the same.

However, those interested in the mining industry and the prices of precious metals, should not despair altogether, as PwC says that there is light at the end of the tunnel, because the industry has faith that the fundamentals will recover. Mining companies are active in cutting back and better managing their costs, seeking ways to attract financing to their business and pursuing strength in unity.

Their hopes are also revived by the signs that the world economy is slowly but gradually stabilizing, with the US recovery and the continuing growth in China being cited as reasons for the optimism that the long-term demand for commodities will increase and so will the prices of metals.